U.S. Securities & Exchange Commission
Litigation Release No. 18332 / September 9, 2003
Accounting and Auditing Enforcement Release No. 1851 / September 9, 2003
SECURITIES AND EXCHANGE COMMISSION V. LAWRENCE BOROWIAK, U.S. District Court for the Northern District of Illinois, Civil Action No. 99 C 6348 (N.D. Ill. August 22, 2003)
The Securities and Exchange Commission announced that a Final Judgment was entered on August 22, 2003 against Lawrence Borowiak, a former Assistant Vice President of Mercury Finance Co. (Mercury), in Securities and Exchange Commission v. Lawrence Borowiak, Civil Action No. 99 C 6348 (Northern District of Illinois, Eastern Division). Borowiak consented to entry of the Final Judgment without admitting or denying any of the allegations made against him in the complaint filed by the Commission. That complaint, filed in September 1999, charges Borowiak with insider trading and participation in a scheme to overstate Mercury's earnings.
Among other things, the Commission's complaint alleges that in 1995 and 1996, Borowiak made a series of fraudulent accounting entries that had the effect of overstating Mercury's net earnings by millions of dollars. The complaint also alleges that in January 1997, Borowiak, knowing that Mercury had overstated its earnings and that Mercury's independent auditors were questioning the earnings information that had been released to the public, sold 45,018 shares of Mercury stock while in possession of this material and non-public information. By selling his shares on January 27 and 28, 1997, Borowiak avoided losses of over $500,000.
The Honorable Blanche M. Manning of the United States District Court for the Northern District of Illinois entered the Final Judgment permanently enjoining Borowiak from further violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 thereunder, and Sections 13(b)(2)(A), 13(b)(2), and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. The Judgment against Borowiak required Borowiak to pay disgorgement of $579,736.25 and required payment of $37,000 in disgorgement within 90 days of the entry of the Final Judgment. The Judgment waived prejudgment interest and did not impose a civil penalty based upon Borowiak's sworn representations regarding his financial condition and credited against the $579,736 disgorgement obligation any restitution paid by Borowiak in U.S. v. Borowiak, No. 01 CR 1084 (N.D. Ill.). The Final Judgment also dismissed the claims against relief defendant JoAnne Borowiak with prejudice.